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Title of Subject: International Economics
Lecturer: Zoltán BARTHA, PhD
Suggested Semester: autumn
No. of Lessons: 30/semester
Credit: 4
NEPTUN code of Subject: GTGKG123BNA
Type of Subject:
Preliminary learning conditions: Micro- and
macroeconomics
Examination: end-term exam
Type of Course:
Brief description of the subject:
The purpose of this course is to direct student’s interest towards international economics and to help students
understand the basics of international trade and finance, and the effects of various international economic
policies on domestic and world welfare.
The course will cover Ricardian and neoclassical theories of trade; trade policies; tariffs, quotas, voluntary
export restraints and customs union; balance-of-payments accounts; foreign exchange markets
Summary of lectures:
1. International economics – theory and practice. Analysis of international trade and
specialisation. Why do countries specialise? What kind of advantages may countries
use during specialisation?
2. Labour unit requirement and labour unit productivity. Adam Smith’s ideas on
enhancing productivity and the theory of absolute advantage.
3. Why would countries specialise in products which others can produce more
efficiently? Trade between countries of different level of development. Introduction
to the theory of comparative advantage.
4. Rethinking comparative advantages. A multi-factor economy – the model of specific
factors. How the presence of multiple factors affect the advantages derived from
international trade?
5. The Heckscher-Ohlin-model, and the Leontief-paradox.
6. The standard model of trade: connections among opportunity costs, relative prices,
international trade function and national income.
7. An economy with multiple goods. Terms of trade indicators: net and income terms of
trade. Influence of economic growth on the terms of trade.
8. First midterm exam
9. Restricting free trade – why do countries apply protectionist instruments?
Retrospection to the history of economics: mercantilism, classical, neoclassical and
Keynesian approach. Instruments of trade policy: tariffs (customs, types of customs),
and other means (quotas, export-subventions, voluntary export restraints, red tape
barriers). Institutions regulating international trade.
10. The effects of tariffs on a small economy: benefits and losses of tariffs. Introducing
tariffs into the standard model of trade.
11. The effects of tariffs on a large economy: changes in terms of trade, determining the
optimal tariff. Benefits and losses in case of a large economy.
12. Special case for network economics – a case for strategic trade theories
13. Registering the international relations of a country: international balance of payments.
Parts of the international balance of payments.
14. Equilibrium income in an open economy. The foreign exchange market. Some basic
aspects of the foreign exchange rate.
15. Second midterm exam
Method of Mid-Semester Task: Students have the option to take two midterm exams. If they
achieve 50% or more in both tests, a final grade is awarded based on their performance.
Evaluation of the Subject:
Students are required to take a final term exam (if they fail or choose not to complete the midterm
exams). Their performance is evaluated as follows:
Points
Grade
0-11
F
12-15
D
16-18
C
19-21
B
22-24
A
Required reading:
1. Paul R. Krugman – Maurice Obstfeld: International Economics – Theory and Policy. Pearson
Education 2003.
2. Zoltán Bartha: Network Economics (online material)
3. Steve Suranovic: International Economics: Theory and Policy. Flat World Knowledge 2010
Suggested reading:
1. Robert A. Mundell: International economics. MacMillan 1968
2. Charles van Marrewijk: International economics: Theory, Application and Theory. Oxford
2007
3. James Gerber: International economics. Pearson, 2007